The number of condominiums sold in downtown Boston fell 15 percent last year, but real estate analysts welcomed a slowdown from 2004's sizzling market and rapidly appreciating prices.
According to a year-end summary by Listing Information Network Inc., or Link, being released to its clients on Saturday, 3,903 condos sales were closed in the city's 12 downtown neighborhoods, compared to 4,586 in 2004. Demand for new units remains strong and supplies remain tight despite an unprecedented building boom, said Link's president, Debra Taylor Blair.
Despite lower sales, condominium prices continued to rise, though at a slower rate than previous years. The median condo price last year was $463,000, a 9.5 percent increase from the previous year. In 2004, the median price rose almost 13 percent.
"This market is moderating from an overheated, rapid-fire condo market," Blair said.
The downtown condo market, despite the slowdown, remains stronger than the market for single-family homes in the suburbs. Data released this week by MLS Property Information Network of Shrewsbury showed that the number of homes for sale in the Boston suburbs in January was up 54 percent from the same time last year, and homes are staying on the market longer.
Downtown condos remain desirable, real estate agents and analysts said, because supplies are limited and many demographic groups, such as aging baby boomers and young professionals, prefer smaller units in urban settings.
Downtown Boston's housing market "does not mirror" the suburban slowdown, Blair said.
Brian Perry, a downtown real estate agent, said a great deal of construction is under way in the South End neighborhood and buyers are eagerly committing to the new condos. Many of these transactions haven't yet been recorded as actual sales, because they can't close until the construction is complete.
He pointed to Gateway Terrace on Washington Street, which his firm, Gibson Domain Domain, is marketing. Of the project's 133 residential units, he said, 129 are under agreement. "If these projects were completed they would've closed," Perry said.
In the South End, 820 sales closed last year, down from 1,015 in 2004, according to the Link data. Except for the Leather District, near South Station, sales were lower in every other neighborhood tracked by Link: Back Bay, Beacon Hill, Charleston, the Fenway, Midtown, the North End, Seaport, the South End, South Boston, the Waterfront, and the West End. Link data shows demand fell across the price spectrum, from studios to sprawling luxury units. Developers said there is high demand for under-$500,000 condos, which are difficult to build due to rising land prices.
"It wasn't a record year but it was a very strong year," said Kevin Ahearn, president of Otis & Ahearn, a Boston brokerage firm. Sales of units priced at more than $1 million rose last year, he added.
"The high end isn't slowing down at all," Ahearn said.
Steve Chase of Boston Choice Properties in the Fenway said his total sales increased last year, but conceded properties are taking somewhat longer to sell and prices are softening, a reality that "sellers aren't quite ready to accept."
Some sellers "are not lowering the prices or there's a lot of back-and-forth-negotiations," he said, in contrast to the spring, when condos routinely sold at asking price.
Coldwell Banker agent Jon Goode, who manages the firm's South End office, said the downtown market went through a "correction" last fall for reasons ranging from uncertainties about the Iraq war to the direction of interest rates. The correction produced "a sustainable situation, not a crazy one," he said.
The number of unsold properties on the market downtown surged 62 percent last year, to 1,258 condos in the final quarter of 2005 from just 776 a year earlier.
Link's Blair said the current slowdown is not over yet. While she expects condo prices to continue to rise at about the current pace, she anticipates further drops in sales early this year. After that, she predicted, "We will see a rebound."